Everest expects knitted fabrics to boost earnings

By Camaron Kao / Staff reporter

Wed, May 21, 2014 - Page 13

Everest Textile Co (宏遠興業), which makes fabrics and garments, yesterday said it expects net income to increase by 89 percent this year from NT$229.73 million (US$7.62 million) last year as the company steps into production of knitted fabrics.

The company has set a target of posting earnings per share of NT$1 this year, up from NT$0.53 last year.

To support its new business, the company plans to spend NT$120 million this year to purchase 100 machines to make knitted fabrics, company manager Nana Liu (劉美那) said.

The goal is to be producing 600 tonnes of knitted fabrics a month by the end of the year, up from 100 tonnes a month, Liu said.

Last quarter, Everest’s knitted fabrics passed Lululemon Athletica Inc’s tests and the company is likely to supply spring and summer wear to the Canadian company next year, according to people familiar with the matter.

The people, who asked not to be named, said the company plans to allocate more than 30 percent of its knitted fabrics capacity to Lululemon in the future.

In order to become a supplier for Lululemon, Everest has developed a yarn dye technology that can be applied to nylon 66 yarns, the people said, adding that the company can currently dye 20 tonnes of yarn a day.

Everest has also received knitted fabric orders from North Face Inc, Columbia Sportswear and Decathlon Group, Liu said.

Orders from Decathlon, the company’s fourth-largest client, are to rise to 3 million yards this year from 2 million yards last year, while orders from North Face and Columbia, its second and third-largest clients respectively, will remain flat from last year, she said.

Everest president Roger Yeh (葉清來) said sales of knitted fabrics would account for 25 percent of the company’s revenue this year, up from 10 percent last year.

Because of rising sales of knitted fabrics, the company’s gross margin is set to increase to 20 percent this year, from 15.75 percent last year, Yeh said.

The company’s revenue may grow by 10 percent to 15 percent this year from NT$7.64 billion last year, he said.

In addition to rising orders for knitted fabrics, orders for woven fabrics from Lululemon would rise to 2 million yards this year from 1.6 million yards last year, and orders for woven fabrics from Abercrombie & Fitch Co would rise to 3 million yards this year from 2 million yards last year, the company said.

“The firm has been providing woven fabrics to Lululemon for five years,” Yeh said.

About 70 percent to 80 percent of woven fabrics used by Lululemon are from Everest, according to the company.

However, orders of woven fabrics from Nike Inc, the company’s largest client, will decline to 12 million yards from more than 13 million yards last year, the company said, adding that these orders produce a lower gross margin.

Sales to the company’s top three clients accounted for about 55 percent of its revenue last year, Yeh said.

Yeh said the company aims to expand its own apparel brand Eversmile’s outlets to 120 this year, up from 80.

Everest aims to increase the revenue of its apparel shops to NT$25 million this year, from NT$17 million last year, Yeh said.

The company has a factory in Thailand, which accounts for 15 percent of its total capacity, but its operations have not been affected by the imposition of martial law, Yeh said.

Last quarter, the company posted a profit of NT$77.67 million, or earnings per share of NT$0.18, up from NT$75.16 million, or NT$0.17 per share, the previous year, a company filing to the Taiwan Stock Exchange showed.